Texas Non-Compete Agreements: Are They Enforceable?
The legal standards courts apply and how geography and duration affect validity.
By The · · 4 min read
When you sign a non-compete agreement in Texas, you're probably wondering if the thing actually holds water. The short answer is yes, but only under specific conditions. Texas courts will enforce non-competes, but they've built in real safeguards to keep them from being unreasonable. That means a poorly written agreement might not be enforceable at all, and a well-drafted one could cost you your next job opportunity. Understanding how Texas handles these agreements is important whether you're signing one as an employee or asking an employee to sign one.
Texas Has a Statute That Governs Non-Competes
Texas Business and Commerce Code Section 15.50 sets out the legal framework. A non-compete is enforceable only if it's "ancillary to or part of an otherwise enforceable agreement." That means you can't just hand someone a non-compete on its own. It has to be tied to something real, like an employment contract, a sale of a business, or a partnership agreement. The agreement also has to protect a legitimate business interest. Texas courts recognize several of these: trade secrets, substantial relationships with prospective or existing customers, substantial relationships with existing prospective or existing employees, or goodwill associated with a business or professional practice. If your non-compete doesn't protect one of these interests, a court won't enforce it.
Reasonableness in Time, Area, and Line of Business
Even if your non-compete is tied to a legitimate business interest, it has to be reasonable in three ways. First, the time period. A one-year restriction is usually reasonable. Two years gets harder to defend. Anything longer than two years is presumed unreasonable unless you can show exceptional circumstances. Second, the geographic scope. If you're a dental hygienist in The Woodlands and the non-compete says you can't work anywhere in Texas, that's probably too broad. A reasonable area might be a specific radius around the employer's office or the areas where the business actually operates. Third, the scope of prohibited activity. The restriction has to be limited to the line of business the employer is actually in. If you worked in marketing and the non-compete says you can't work in any business anywhere, that's overreaching.
How Courts Actually Apply These Standards
Texas courts don't rubber-stamp non-competes just because they exist. They look at the specific language and circumstances. A court will read the agreement strictly against the person who drafted it, usually the employer. If there's any ambiguity about what "line of business" means or what the geographic area includes, the court interprets it in favor of the employee's right to work. That's good news if you're the employee and the agreement is vague. It's a warning if you're the employer and you drafted something loose. I've seen cases where an employer thought they had a solid restriction, but the court found it unenforceable because the time period was too long or the area was too broad for the actual business.
What Happens If You Violate a Non-Compete
If you breach a non-compete and the employer sues, they can ask for an injunction to stop you from working. They can also seek damages for lost profits or business harm. An injunction is the real threat. A court can order you to stop your work immediately while the case is pending. That can mean losing a job offer or having to stop work you've already started. Damages are harder to prove, but they're possible. The employer has to show actual harm from your violation. In The Woodlands area, where business is competitive and several companies share the same customer base, courts take these cases seriously. But again, if the non-compete is unreasonable, the court won't enforce it at all.
Practical Steps If You're Facing a Non-Compete
If you've signed a non-compete and you're thinking about taking a new job, read the agreement carefully. Look at the time period, the geographic area, and the scope of prohibited work. Ask yourself if your new job actually falls within what the agreement restricts. If you're unsure, don't just hope for the best. A lawyer can review the specific language and tell you whether the restriction is likely to be enforceable. Sometimes a non-compete is so broad or so old that it's dead letter. Other times it's a real constraint. If an employer has already threatened legal action, you need legal advice before you move. The cost of a review now is much less than defending a lawsuit later.
If you're an employer thinking about putting employees under non-competes, make sure they're specific and reasonable. Overly broad agreements don't protect you and can damage your reputation with employees. Work with a lawyer to draft something that actually protects your legitimate business interests without overreaching.
The Rolon Law Firm serves business owners and employees in The Woodlands and surrounding areas. If you need to understand your non-compete obligation or you're drafting one for your business, call us to talk through your situation.